Indonesia Mobile Telecom Industry -

Indonesia:mobile

telecom industry

Solidiance examines a telecom template for something déjà vu

July 2009

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Indonesia : Mobile Telecom IndustrySolidiance examines a telecom template for Indonesia’s mobile telecom market

Whereas there are no clean cut comparisons tothe rapid democratisation of the mobile phone aswe are seeing in Indonesia, the latent demand inrural markets is something that telecom providers inother parts of the world have capitalised on in therecent past (and present). In India, for example,the market is highly competitive with nearly thesame number of providers as in Indonesia. ARPU issimilarly falling, and providers are scrambling tokeep churn low, and profitability stable. Anexample for Indonesian providers to look at is BhartiAirtel, which has been able to carve out thelargest segment of India’s mobile telecom market.

Refine your process, strive fordominance, and build a brand.

Sunil Bharti Mittal – Chairman, BhartiAirtel

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Indonesia’s mobile telecom industry

Dramatic Growth

Indonesia’s telecom sector is experiencing growththat is by any measure exceptional. The marketdynamics create for a highly competitive industryin which the consumers are reaping the benefits.

Whereas penetration rates indicate mobile phonepenetration is close to 50% of the population,realistic penetration factoring in the number ofmobile phone users with multiple handsets wouldadjust down that number closer to 30%. Thedemocratisation that is occurring in the market hasset up the Indonesian market to see dramatic risesin mobile phone usage over the next three to fiveyears. The competitive landscape coupled withthe ever increasing capabilities of mobile phones ispriming Indonesia for a major societal change asmore Indonesians are becoming mobile phoneusers.


Success in a similar market

Bharti Airtel is the preeminent service provider inIndia’s highly competitive mobile telecom market.It is able to retain a large market share and reapprofits by implementing a comprehensive strategyaimed at gaining new customers while retainingexisting customers. The strategy hinges on offeringindustry leading customer service, tailored plans forcustomers, aggressive rollouts of new technology,and an extensive branding campaign.

Extensive Branding: The ‘Express Yourself’campaign by Bharti has been a major effort toadd an emotional component to its brand. Mobilephone communications are, by their nature, oftentools for consumers to ‘express themselves’ toothers. The ad campaigns have had strongemotional components to them, and touch onthemes such as national pride. By creating anassociation between past successes of Indians andBharti Airtel’s services, customers no longer viewBharti’s service offerings as undifferentiated.Additionally, the brand campaign was meant totie together all of Bharti Airtel’s offerings under oneunified ‘face’ to consumers. This consistency andbrand positioning have been keys to Bharti’ssuccess in the Indian mobile telecom market. Thepurpose of the extensive branding campaign byBharti was to create brand relevance in a marketthat was predominantly defined by price. It aimedto lessen the influence of price on consumer’sdecision making process, and raise the influenceof the brand itself. Catchy campaigns, andaffiliations with the likes of A R Rahman, who wassigned to create a unique Airtel ring tone, servedto position Bharti Airtel as the most favourablyplaced brand in the industry. 4

It had soon become associated with desirableattributes such as ‘cool’ and ‘creative’ that alsotranslated into increased market share.

This strategy by Bharti Airtel in an Indian marketthat closely parallels the current Indonesian mobiletelecom market has lessons for operators thathope to duplicate its success. In addition tobranding, Bharti Airtel has other ‘best practices’that will be covered in subsequent articlecommentaries over the course of the next twomonths.

Indonesian market not unprecedented

Differentiating merely on network,coverage and SMS is just not enough. Youneed to go behind all the rationalindentifies – which are prerequisites in anycase- and connect at a deeper level. Weneeded a strong differentiator in anincreasingly commoditised and crowedmarket...We believe ‘Express Yourself’allows us to connect at a deeper leveland create a long term platform for thebrand.

Atul Binda – Chief Marketing Officer, BhartiTeleventures

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Establishing brand relevance

Bharti Airtel’s branding strategy entailed extensive use of all advertising channels. With a major slant towardstelevision commercials, Bharti took an aggressive approach similar to alcohol producers in the United States. Ratherthan focus on promoting individual products and services, Bharti focused on selling the Airtel brand. Many televisionadvertisements include India’s largest Bollywood stars, and aim to be memorable rather than sell anything.

GSM Subscribers (Millions) 2007-2008

A model for success


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Lessons for Indonesian providers

Bharti Airtel did not enter the market as a premiumservice provider, and did not have any clearcompetitive advantages over its competitors.What it realized is that competing on price in ahighly competitive and saturated market wouldnot be an effective long term strategy. Rather thatworry about being undercut by low cost providers,Bharti Airtel focused on creating brand relevance,and selling its brand to consumers rather than thecommoditised services. This has proven to be aneffective strategy, and has helped Airtel retainand grow its customer base. Additionally, throughits extensive brand campaign, it has been able tochange the market dynamics by making pricing acomponent of customer decision making ratherthan the singular decision making factor.

Airtel Revenues and Profits

Lessons can be learned

Creating a brand

Bharti Airtel did not differentiate themselves fromother providers in India simply through offeringsuperior quality, but through making a concertedeffort at positioning themselves favourably in themind of consumers. This concerted effort entailedputting forth a large amount of resources to makea real change in how Bharti Airtel was viewedcompared to alternative mobile telecom serviceproviders. In 2007-08, Bharti Airtel increased itsadvertising expenditure by 40.7% and saw a AirtelRevenues and Profits corresponding 44.4% rise insales. In 2008, Airtel had the second highestadvertising spend out of any INR (Millions)company in India (based on television and printadvertisements). It spent nearly $48m in 2008,second only to Hindustan Unilever. It SolidianceLibrary 2009 understood the societal dynamics,namely India’s love of its Bollywood actors, andcreated ad campaigns featuring several ‘A list’stars.


Solidiance is a marketing and innovation strategy consulting firm with focus on growth in Asia Pacific. We are devoted to working side-by-side with ourclients to outpace the competition, close gaps in growth and deliver breakthroughs in performance and profitability. Our Asia focus provides ourclients with a better understanding of intrinsic regional issues.

To subscribe to further white papers and to learn more about Solidiance please visit: www.solidiance.com

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Mark is a Principal based in the Singapore office with

more than eight years of consulting experience. Mark

has a strong focus on quantitative based projects.

Previous roles include being regional manager for

Synovate Business Consulting in Singapore, handling

projects for MNCs across Asia, focused predominantly

on the market and competitive strategy side. Mark

managed most survey-based projects for MNCs where

he advised international companies on market entry,

customer segmentation prioritization and growth

strategies. Having worked for five years in the M&A

team of a Korean Conglomerate in Spain, Mark also has

vast experience with mergers and acquisitions in

Europe, Asia and Africa. Mark is fluent in Korean, English

and Spanish. He holds a BS in mechanical engineering,

from the Worcester Polytechnic Institute (United States)

and a MBA from the University of Rochester.

Mark Lee - Principal

Osman is a Consultant based in the Singapore office.

He is focussing on emerging technology, telecom and

media industries tracking developments and

benchmarking metrics. He is currently focusing on the

telecom industry, across South East Asian markets. With

a passion for combining numerical and qualitative

analytics, Osman is interested in advanced market

segmentation and size forecasting models to help

clients identify and prioritize market opportunities and to

develop growth strategies.

Osman graduated in 2008 from the Ross School of

Business with a Bachelor in Business Administration.

Osman Syed – Consultant

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